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Transportation in Canada 2000 |
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2
TRANSPORTATION AND
THE CANADIAN ECONOMY
The Canadian Economy
The Canadian economy continued to expand in 2000 - the ninth
year of uninterrupted growth - as real Gross Domestic Product
(GDP) increased 4.5 per cent, the highest rate of increase since
1994. The economy moved close to capacity as non-farm goods industries
operated at 85.7 per cent of capacity in the second quarter. There
were reports of firms facing constraints due to skilled labour
shortages. This was the seventh straight quarter of increased
capacity utilization. There were signs of easing, however, in
the latter part of the year as a slowdown of the US economy affected
production and consumption.
Figure 2-1 shows how close to capacity the goods industry worked
in the Canadian economy from 1986 to 2000.
Table 2-1 compares various general economic indicators over
the last year and the last five years, and Figure 2-2 charts the
growth of real GDP since 1996.
For the second year in a row, business investment spending
provided a major source of increased demand in the economy, with
a 10.6 per cent increase in real terms. Within business, investment
spending on machinery and equipment rose strongly, at 18.9 per cent,
a rate comparable with that of the previous year. Spending on
telecommunications, computers and office equipment rose 38 per
cent in 2000, and accounted for 49 per cent of total business
investment. Consumer spending rose four per cent, up slightly
from the 3.5 per cent increase the previous year. Government
spending on goods and services rose 2.4 per cent, while government
capital spending rose 16.2 per cent.
For the fourth year in a row, the manufacturing industries
surged ahead, rising 5.7 per cent in 2000; however, the fourth-quarter
decline in production in the automotive and electronic goods industries
slowed the advance of the sector. Mining activity rose 6.4 per cent,
reflecting strong increases in mineral fuel production. Overall
production in the primary goods industries rose 2.9 per cent as
agriculture activity fell 3.2 per cent and forestry activity increased
1.5 per cent. Construction activity was up 3.3 per cent, due to
very strong residential building activity. Retail trade had a
good year, increasing 5.8 per cent, although the fall in automobile
sales dampened activity here. Transportation activity was up 5.6
per cent, its fourth year of good growth.
As Figure 2-3 shows, the year 2000 was a good one economically
for all regions of the world. The US economy posted real economic
growth of five per cent, although growth rates decelerated in
the second half of the year as business investment and personal
consumption expenditures fell. While Canadian merchandise exports
to the United States started to falter in the last two quarters,
for the year as a whole they rose 16.2 per cent to reach a record
$360 billion. Western European real economic growth is expected
to be 3.4 per cent in 2000; merchandise exports destined
there also increased sharply, by 15.2 per cent. The Asia Pacific
region (including China) is expected to show 3.6 per cent in real
economic growth in 2000, up from 2.6 per cent in 1999. Japan's economy is growing slowly, and its real GDP
increased 1.9 per cent in 2000 up from the 0.8 per cent
growth in 1999. Merchandise exports to Japan rose 7.6 per cent
in 2000. South America's economy is expected
to show growth at 3.6 per cent, a reversal of the one per cent
drop in 1999. Like Canada, Mexico benefited from the economic
boom in the United States and in 2000 economic activity is
expected to increase by about seven per cent.
As illustrated in Figure 2-4, Canada had a record merchandise
trade surplus of $54 billion in 2000, up from $34 billion in 1999.
Merchandise exports grew 15.8 per cent to $418 billion,
while imports grew 11.1 per cent. Exports to the United
States, which made up 86 per cent of all exports, increased 16.2
per cent. Imports from the United States, which made up 74 per cent
of all imports, grew only 7.3 per cent. Canada's
trade surplus with the United States rose to $92.1 billion, a
50 per cent increase from 1999.
Increases in the export of energy products and machinery and
equipment were responsible for the rise in total exports. In 2000,
exports of crude oil, natural gas and electricity to the United
States rose 76.8 per cent to $54 billion, while machinery
and equipment exports rose 22.8 per cent. Telecommunications equipment
exports rose 59 per cent. Exports of automotive products
increased less than one per cent, while forestry exports increased
5.8 per cent.
In terms of imports in 2000, machinery and equipment purchases
by Canadians rose 13.5 per cent to $122 billion and energy
product imports rose 65.8 per cent to $18 billion.
In 2000 employment in Canada was 14.9 million an increase of
378,000 or 2.6 per cent and the fourth year of strong growth.
Employment growth was strongest in the service sector where it
grew 2.8 per cent while it grew only 2.2 per cent in the goods
producing sector. These increases compare to a less than one per
cent increase in the total population and a 1.3 per cent increase
in the population fifteen years and older from which the labour
force is taken.
While the average value of the Canadian dollar in 2000 was
unchanged from 1999, at US$0.673, it trended down slightly during
the year to close at US$0.667 from US$0.69 in January. The broadest
indicator of prices, the GDP deflator, rose 3.6 per cent in 2000,
while the Consumer Price Index (CPI) rose 2.7 per cent. Energy
prices had a big effect on price levels. The CPI, excluding the
effect of energy prices, rose only 1.5 per cent while energy prices
paid by consumers rose 16.2 per cent. Energy price increases affected
the prices that consumers paid for transportation, as these rose
five per cent in 2000.
The strong economy in 2000, along with tax reductions and employment
equity payments, meant that real disposable income per capita
rose three per cent, just over one per cent more than
the increases of the past two years. This meant that real disposable
income per capita rose at a greater rate in Canada than in the
United States.
Figure 2-5 compares real personal disposable income per capita
of Canadians and Americans from 1996 to 2000.
In 2000, the number of Canadians engaging in international
travel increased on all fronts and in total rose 1.6 per cent.
Travel to the United States rose 1.1 per cent, while trips to
other countries rose 6.2 per cent. Total trips by foreigners to
Canada rose only 0.4 per cent. Trips by Americans fell 0.9 per
cent, as both their same-day and overnight trips declined. Trips
by other international travellers increased by 4.9 per cent, as
European travellers increased their trips by 3.4 per cent and
trips from residents of Asia rose 6.8 per cent.
Figure 2-6 shows the amount of international overnight travel
to Canada over the last decade.
Overview of Provincial Economic Performance
As Table 2-2 shows, the strong economic growth in 2000 was
spread across regions of Canada. Only Nova Scotia is expected
to have a real growth rate below three per cent. Alberta
and Newfoundland had the highest growth of economic activity,
fuelled by increased production in the oil and gas industries.
Nova Scotia was affected by the end of construction for the Sable
Island Project. In New Brunswick, construction and manufacturing
activity boosted growth. Ontario and Quebec started to be affected
by the weakening US economy in the later part of the year,
but had nevertheless good economic growth. Manitoba's manufacturing
industries did well in 2000. Saskatchewan benefited from the petroleum
and potash industries, although grain prices were weak. British
Columbia continued to recover from the effects of the Asian downturn
and it has benefited from being close to the US west coast,
a region with strong economic performance and a destination for
its exports.
The Canadian Economy
- Appendix 2-1 Personal Expenditures
on Transportation, 1998
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